Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

Monday, February 27, 2017

Article on the Rights & Duties of Homesteaders, Life Tenants & Remaindermen

Co-tenantGus G. Tamborello recently published an Article entitled, “A House Divided”: The Rights and Duties of Homesteaders, Life Tenants & Remaindermen, 9 Est. Plan. & Community Prop. L.J. 29 (2016). Provided below is an abstract of the Article:

Anyone who has dealt with decedent’s estates for any considerable period of time has likely confronted one or all of the following scenarios: 

  1. A. A person dies intestate owning separate and community property, leaving behind a surviving spouse, from a second marriage that does not get along with the decedent’s children from a previous marriage; 
  2. B. A person dies owning community and separate property, and the decedent’s will leaves it to someone other than a surviving spouse;
  3. C. A person either dies intestate leaving several surviving descendants or has a will devising property to the children or grandchildren in equal, undivided interests; 
  4. D. A person devises only a life-estate to someone, or a surviving spouse inherits a life estate in one-third of a real estate, and the remainder passes to individuals with whom the life-tenant does not get along. 

Each of these common scenarios give rise to competing interests, particularly concerning real estate and, more particularly, with respect to the homestead. This article will explore the often confounding relationship between the homesteader, the life tenant, or both, and the remaindermen or co-tenants. This article will also discuss the various rights and duties among them.  

 

February 27, 2017 in Articles, Estate Planning - Generally, Professional Responsibility | Permalink | Comments (0)

Sunday, February 19, 2017

Article on New DOL Fiduciary Rule & Estate Planners

Fiduciary estate planningJamie P. Hopkins recently published an Article entitled, Be Wary When Giving Investment Advice to Clients: Estate Planners May Run Afoul of the Department of Labor’s New Rule, Tr. & Est. (Feb. 2017). Provided below is an abstract of the Article:

In April 2016, the Department of Labor (DOL) finalized its long-awaited conflict of interest rule and related prohibited transaction exemptions, expanding the definition of fiduciary “investment advice” under the Employee Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue Code. While the new rules were primarily developed in an attempt to further regulate the advice provided by professionals in the financial services industry with respect to individual retirement accounts, the newly expanded definition of “investment advice” will inevitably cover advice commonly by estate planners. As a result, estate-planning attorneys, who already owe their clients a high standard of care and duty of loyalty under most state laws, could be subject to more stringent fiduciary requirements under federal law, creating new liability concerns. 

 

February 19, 2017 in Articles, Current Events, Estate Planning - Generally, Professional Responsibility | Permalink | Comments (0)

Thursday, February 16, 2017

Article on the Republican Theory of Fiduciary Law

Fiduciary lawEvan J. Criddle recently published an Article entitled, Liberty in Loyalty: A Republican Theory of Fiduciary Law, 94 Tex. L. Rev. (Forthcoming 2017). Provided below is an abstract of the Article:

Conventional wisdom holds that the fiduciary duty of loyalty is a prophylactic rule that serves to deter and redress harmful opportunism. This idea can be traced back to the dawn of modern fiduciary law in England and the United States, and it has inspired generations of legal scholars to attempt to explain and justify the duty of loyalty from an economic perspective. Nonetheless, this Article argues that the conventional account of fiduciary loyalty should be abandoned because it does not adequately explain or justify fiduciary law’s core features.

The normative foundations of fiduciary loyalty come into sharper focus when viewed through the lens of republican legal theory. Consistent with the republican tradition, the fiduciary duty of loyalty serves primarily to ensure that a fiduciary’s entrusted power does not compromise liberty by exposing her principal and beneficiaries to domination. The republican theory has significant advantages over previous theories of fiduciary law because it better explains and justifies the law’s traditional features, including the uncompromising requirements of fiduciary loyalty and the customary remedies of rescission, constructive trust, and disgorgement.

Significantly, the republican theory arrives at a moment when American fiduciary law stands at a crossroads. In recent years, some politicians, judges, and legal scholars have worked to dismantle two central pillars of fiduciary loyalty: the categorical prohibition against unauthorized conflicts of interest and conflicts of duty (the no-conflict rule), and the requirement that fiduciaries relinquish unauthorized profits (the no-profit rule). The republican theory explains why these efforts to scale back the duty of loyalty should be resisted in the interest of safeguarding liberty.

 

February 16, 2017 in Articles, Estate Planning - Generally, Professional Responsibility | Permalink | Comments (0)

Friday, January 20, 2017

Article on Gig Employees & Their Retirement Benefits

Gig economyPaul M. Secunda recently published an Article entitled, Uber Retirement, U. Chicago Legal Forum (2017). Provided below is an abstract of the Article:

The rise of the gig economy with its part-time, itinerant, independent workers, in conjunction with the employee-centric nature of occupational retirement benefits under ERISA, has led to gig employees largely lacking meaningful retirement benefits. Current proposals to provide portable benefits to gig workers as independent workers or independent contractors are unacceptable because such benefits would not be secured by the fiduciary consumer protections of ERISA. 

However, two developments with regard to the retirement security of the gig workers are promising. First, there is now increasing examples of gig workers being found to be common-law employees under tests like ERISA’s Darden test. As common law employees, gig workers are entitled to the reporting and disclosure, vesting, funding, and fiduciary protections of ERISA. Second, the use of an open MEP model, in which pooled employer plans (PEP) have a pooled plan provider (PPP) as the named fiduciary, are gaining growing bi-partisan acceptance. This article encourages Congress to promptly adopt the open MEP model, free of current regulatory restrictions, so that gig employees can enjoy retirement security with the peace of mind that ERISA fiduciary protections provide under industry-wide gig employee open MEPs.

 

January 20, 2017 in Articles, Current Events, Estate Planning - Generally, Professional Responsibility | Permalink | Comments (0)

Wednesday, January 11, 2017

Article on Fiduciary Duties in 2017

Fiduciary 2016Gail E. Cohen recently published an Article entitled, In Like a Lamb, Out Like a Lion: For Fiduciaries, 2016 Started Out Quietly, but 2017 Promises to Be a Wild Ride, Tr. & Est. 28 (Jan. 2017). Provided below is a summary of the Article:

The year 2016 started out quietly, seemingly a continuation of the status quo. We continued acting as fiduciaries of trusts that took advantage of tried and true tax strategies. Professional fiduciaries received good news in April when the Supreme Judicial Court of Massachusetts overturned the troubling Pfannensitehl decision of 2015, thereby providing assurance that discretionary trusts weren’t subject to claims of divorcing spouses in Massachusetts. Later in the year, as expected, the Internal Revenue Service put forth long-awaited proposed regulations intended to curtail the use of valuation discounts in gift and estate planning for family entities. 

Then came Donald J. Trump. Seemingly everyone expected Hillary Clinton to win the presidency, thereby continuing the status quo, albeit with higher income taxes and higher estate and gift taxes (or at least a lower exemption from those taxes). Up until the election, there was a flurry of activity to take advantage of valuation discounts prior to the Internal Revenue Code Section 2704 regulations becoming final. Now, we don’t know exactly what 2017 will bring. 

A few items to watch: lower income tax rates; elimination of gifts of appreciated assets to private charities; elimination of estate and gift taxes and presumably the generation-skipping transfer (GST) tax; income tax at death or carryover basis; and non-adoption of the proposed IRC Section 2704 regulations. Looking ahead, we should examine the potential impact that these actions may have on professional fiduciaries. 

 

January 11, 2017 in Articles, Estate Planning - Generally, Estate Tax, Generation-Skipping Transfer Tax, Gift Tax, Income Tax, Professional Responsibility, Trusts | Permalink | Comments (0)

Monday, January 2, 2017

Article on Intersection of Contract and Fiduciary Law

Contract law2Paul B. Miller & Andrew S. Gold recently published an Article entitled, Introduction to Contract, Status, and Fiduciary Law (2016). Provided below is an abstract of the Article:

Contractual and fiduciary relationships are the two primary mechanisms through which the law facilitates coordinated pursuit of our personal interests. Contract and fiduciary law are fields often represented in oppositional terms. Many believe that while contract law allows individuals to pursue their interests independently, fiduciary law allows them to pursue their interests in a dependent or interdependent way. This view seems to suggest that the boundaries between contract and fiduciary law are fixed rather than fluid. 

Bringing together leading theorists to analyze important philosophical questions at the intersection of contract and fiduciary law. Contract, Status, and Fiduciary Law demonstrates that popular characterizations of the relationship between contract and fiduciary law are overly simplistic. By considering how contract and fiduciary law interact, and not just how they differ, the contributors to this volume offer new insights into a range of topics, including: status relationships, voluntary undertakings, duties of loyalty, equity, employment law, tort law, the law of remedies, political theory, and the theory of the firm. 

This introductory essay provides an overview of the contributions to the volume, indicating their significance for our understanding of relationships between contract and fiduciary law.

 

January 2, 2017 in Articles, Estate Planning - Generally, Professional Responsibility | Permalink | Comments (0)

Monday, December 19, 2016

Case Summary on Will Beneficiary's Cause of Action Against Drafting Attorney

Will contest prPROFESSIONAL RESPONSIBILITY: Disappointed will beneficiary has a cause of action against the drafting attorney as a third-party beneficiary. The testator instructed her attorney to draft a will leaving her estate to her mother and if her mother predeceased, to a named charity. The mother predeceased but subsequent litigation determined that her will gave only tangible personal property to the charity and failed to dispose of her real property which therefore passed through intestacy to her heirs. The charity brought an action against the attorney on a third-party beneficiary theory and prevailed both at trial and on appeal to the Virginia Supreme Court. In Thorsen v. Richmond Society for the Prevention of Cruelty to Animals, 786 S.E.2d 453 (Va. 2016), the court held that under Virginia common law, third-party beneficiaries can sue on oral contracts; that the applicable three-year statute of limitations begins to run on the testator’s death, and that the evidence was sufficient to show the testator contracted with the lawyer to draft a will benefitting the testator’s mother and the charity. One justice dissented arguing that abolition of the common law privity requirement is a policy issue to be decided by the legislature and not by the court.

Special thanks to William LaPiana (Professor of Law, New York Law School) for bringing this case to my attention.

 

December 19, 2016 in Estate Planning - Generally, New Cases, Professional Responsibility, Wills | Permalink | Comments (0)

Saturday, December 17, 2016

Case Summary on Succession of Fiduciary

Succession fiduciaryPOWER OF ATTORNEY: A successor agent is not a fiduciary until succession is effective. An Illinois intermediate appellate court in In re Estate of Shelton, 60 N.E.3d 121 (Ill. App. Ct. 2016), affirmed the trial court’s dismissal of an action alleging that the successor agent under a power of attorney breached the agent’s fiduciary duties owed the principal because until the successor becomes the agent, no duties arise and the certification of the incompetency of the original agent which would trigger the succession was not made until after the alleged breach.

Special thanks to William LaPiana (Professor of Law, New York Law School) for bringing this case to my attention.

 

December 17, 2016 in Current Events, Estate Planning - Generally, New Cases, Professional Responsibility | Permalink | Comments (0)

Wednesday, December 14, 2016

Article on Contractual & Fiduciary Relationships

FiduciaryPaul B. Miller & Andrew S. Gold recently published an Article entitled, Introduction to Contract, Status, and Fiduciary Law (2016). Provided below is an abstract of the Article:

Contractual and fiduciary relationships are the two primary mechanisms through which the law facilitates coordinated pursuit of our personal interests. Contract and fiduciary law are fields often represented in oppositional terms. Many believe that while contract law allows individuals to pursue their interests independently, fiduciary law allows them to pursue their interests in a dependent or interdependent way. This view seems to suggest that the boundaries between contract and fiduciary law are fixed rather than fluid. 

Bringing together leading theorists to analyze important philosophical questions at the intersection of contract and fiduciary law, Contract, Status, and Fiduciary Law demonstrates that popular characterizations of the relationship between contract and fiduciary law are overly simplistic. By considering how contract and fiduciary law interact, and not just how they differ, the contributors to this volume offer new insights into a range of topics, including: status relationships, voluntary undertakings, duties of loyalty, equity, employment law, tort law, the law of remedies, political theory, and the theory of the firm. 

This introductory essay provides an overview of the contributions to the volume, indicating their significance for our understanding of relationships between contract and fiduciary law.

 

December 14, 2016 in Articles, Estate Planning - Generally, Professional Responsibility | Permalink | Comments (0)

Monday, December 12, 2016

Article on Fiduciary Duties & ESG Investing

Fiduciary duty esg2Susan N. Gary recently published an Article entitled, Values and Value: University Endowments, Fiduciary Duties, and ESG Investing, 42 J. C. & U. L. 247 (2016). Provided below is an abstract of the Article:

The trustees managing university endowment funds must comply with fiduciary duties that require the trustees to act in the best interests of the university and to act as prudent investors when managing the funds. This article shows that these fiduciaries may adopt investment policies that consider material environmental, social, and governance (ESG) factors as part of an overall investment strategy. The article explains why older arguments that fiduciaries should avoid “social investing” are no longer relevant and how the prudent investor standard has evolved to include ESG investing. The article discusses the changes in socially responsible investing since the anti-apartheid era and reviews a significant number of empirical studies that show that ESG investing has had a neutral or positive effect on financial return. Based on the empirical work, evidence of the financial industry’s growing use of extra-financial factors in investment analysis, and recent guidance from the Department of Labor, the article concludes that a trustee responsible for a university endowment will not breach the duty of loyalty or the duty to act as a prudent investor by directing the endowment’s use of ESG investing as part of an overall financial investment strategy.

 

December 12, 2016 in Articles, Estate Planning - Generally, Professional Responsibility, Trusts | Permalink | Comments (0)